Foreign Investment in China Shows New Trends

According to the latest statistical results of IBM Factory Layout International, which tracks global investment projects, China has attracted foreign direct investment (FDI) in the chemical and pharmaceutical industries for the third year in a row. Between 2003 and 2005, China's chemical and pharmaceutical industries attracted 24% of FDI; investment in production declined, and investment in R&D doubled. IBM's monitoring also showed that the number of FDI projects in the global chemical and pharmaceutical industries has been determined. , declined during these three years. The number of FDI projects in China was the highest in 2003, which was 275; in 2005, it dropped to 195. In the United States, the number of FDI projects also dropped from 153 in 2003 to 104 in 2005.
Judging from the situation in various regions, FDI in the chemical and pharmaceutical industries has changed from 2003 to 2005. Asian developing markets, including China, India and Thailand, account for one-third of all identified FDI projects. From 2003 to 2005, China's production-related FDI projects decreased by about 10%, and in 2005 accounted for 60.3% of China's total number of chemical FDI projects. Relatively speaking, China's FDI projects related to R&D have nearly doubled here.
Kevin Swift, chief economist of the American Chemistry Council (ACC), believes that developing China is becoming a “world factory” and the long-term development prospects of the chemical industry are promising. China's 264 billion U.S. dollars/year chemicals market is second only to the United States and Japan, ranking third in the world. In 2005, China became the third largest chemical producer, exceeding the output value of 223 billion U.S. dollars in Germany.
The China Chemical Industry Park, which is dedicated to the development of the China Petroleum and Chemical Industry Association, plays an important role in raising investment, attracting foreign investment, promoting industrial development, promoting technological upgrading, developing regional economies, and improving management. Large-scale petrochemical companies in China plan to invest US$20 billion by 2010 to expand their olefins and derivatives. Dow Chemical has planned to invest more than US$200 million to expand its epoxy resin business in China.
Several major joint ventures in China have also set up factories or expanded production. Shell and CNOOC have invested in the US$4.3 billion petrochemical complex in Daya Bay, Guangdong Province, and have already started production, targeting the Guangdong market, which accounts for about 20% of China's chemical demand. BASF and Huntsman invested $1 billion in an isocyanate joint venture in Shanghai, which has also started production.

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